Europe needs “stronger banks" The CEO of Unicredit said this Andrew Orcel, speaking on Tuesday at the Made in Italy Summit organized by Sole 24 Ore together with SkyTg24 and the Financial Times. An occasion in which the manager underlined the importance for Europe of a “stronger capital markets system and a more unified banking system." Orcel did not speak directly about the dossier Unicredit Commerzbank, but the message sent was clear to the audience, the markets and the German government, which is strongly opposed to the operation, defined as "hostile", through which the Italian bank acquired a potential 21% share of Germany's second largest credit institution.
Orcel: “Without pan-European champions, challenges cannot be won”
“I think Europe needs bigger, stronger banks to support the economy,” Orcel said, adding that “without Pan-European champions“, Europe “will not overcome the challenges highlighted by Mario Draghi (in his report on competitiveness, ed.) and many other leaders before him”.
“The creation of aeuropean banking union would help address the barriers that prevent banks from fully supporting our sector in each of the European Union countries,” Orcel explained, noting that “this would be a transformative step for the European economy, allowing for stronger growth, job creation, innovation and, ultimately, value and wealth across the continent.” However, “Banking union alone is not enough, Europe also needs the Capital Markets Union to complete it”.
The banker also dwelt on the path of Unicredit which “has strong and deep roots in Italy, but began to truly prosper – he recalled – only when we adopted a European vision that embraced all the nations that compose it”. “Today we are a pan-European bank that manages a federal model in which 13 separate banks join as partners. This model works,” because the strategic visions are “unified,” while the execution is “decentralized.” Words that were directed directly to Frankfurt, where Commerzbank's top management has repeatedly expressed fears of losing “autonomy” and “independence,” underlines the Sun 24 Hours.
German Buch (ECB Supervisory): “It is not the ECB’s job to prevent bank mergers”
"It is not the ECB's job to stop mergers cross-border banking”. He said Claudia Buch, German Chair of the Supervisory Board of the ECB. “Whatever we can do in the area of supervision must not stand in the way of a greater cross-border integration“, Buch said at a conference in Riga. “We will certainly do everything within our competence to ensure that cross-border activity is not hindered,” he reiterated.
Words that will not have pleased the German government, opposed to the operation. In fact, within the political panorama of Germany Some hope that the ECB will block the deal. However, high-level representatives of financial institutions, including ECB President Christine Lagarde, have stressed that Bank mergers are desirable. We recall that the 26 members of the Governing Council of the European Central Bank will have to give the final green light to the operation, granting the so-called 'non-objection' procedure to an integration agreement. In the meantime, Unicredit is waiting for Supervisory Board of the central bank, led by the German Buch, give the necessary green light that will allow the Italian bank to increase its stake in Commerzbank to 29,9% after having announced last September 23 that it had acquired a potential 21% stakeThe decision could come by the end of October.
Unicredit-Commerzbank, increasing consensus on the dossier
At the same time, the market's appreciation of the Unicredit-Commerzbank operation continues to grow. BlackRock CEO Larry Fink, while not wanting to comment directly on the affair, said he was in favor of the marriage between banks in Europe and urged the Old Continent to continue to unify its banking market.
“Europe needs a stronger capital markets system and a more unified banking system,” Fink said in an interview at the Berlin Global Dialogue conference, as reported by Bloomberg, when asked his view on a possible merger of the two banks. BlackRock, among other things, is a shareholder of both, holding 7,019% of Unicredit and 7,34% of Commerzbank.
Moody's ready to raise rating in case of merger, Intermonte raises target price
The operation with the German bank "is delicate from both a strategic and industrial point of view", analysts at Intermonte, who define the situation as “a game of poker with few high-level players around the table”. However, the Italian bank “probably has one of the most skilled players, able to deal with all parties”. In any case, according to experts it's not "a short-term gamble". Therefore, “while we believe that synergies will come, it is unlikely that they will materialize in the near future”.
Intermonte also raised its target price on Unicredit at 43,6 euros (from 41,4), reflecting the new estimates on revenues and profit in light of a "resilient" interest margin (Net income interest), which seems destined to remain high. The recommendation remains "Neutral" in light of the difficult macroeconomic context, the rate cut, geopolitical tensions and exposure to Russia. Meanwhile Moody's affirmed its debt and deposit ratings, but said it was ready for a rating upgrade stand-alone (Baseline Credit Assessment) in the event of an acquisition of Commerzbank.
In this context, the stocks of the two banks are losing ground on the stock exchange in a difficult day for the banking sector: just over an hour after the market closes, Unicredit shares are down 1,3%, while Commerzbank shares are down 1,6%.
(Last update: 16.02 on Wednesday 2 October)
